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(All figures in U.S. dollars unless otherwise indicated)
TORONTO, Nov. 5 /CNW/ - Cinram International Income Fund ("Cinram" or the
"Fund") (TSX: CRW.UN) today reported third quarter revenue of $485.1 million
compared with $477.2 million in 2006, and earnings before interest, taxes, and
amortization (EBITA(1)), excluding unusual items, of $66.7 million compared
with $90.1 million in the third quarter of 2006. The Fund also announced a
change in its distribution policy based on a revised outlook for Cinram. It is
the Fund's intention to suspend all distribution payments following the
distribution for the month of December 2007. A distribution of C$0.1625
(previously C$0.2708) per unit has been declared for November and is intended
to be declared for December 2007 (see "Distributions" below).
"Over the last quarter we experienced a confluence of factors that
adversely affected our DVD business and reinforced the merits of our
diversification strategy into attractive, higher-growth markets," said Cinram
chief executive officer Dave Rubenstein. "These factors include general price
erosion in the DVD replication marketplace and volumes that fell short of
customers' forecasts. The impact on our business outlook has been compounded
by revised pricing coupled with reduced forecasts from certain of our studio
customers and the strengthening of the Canadian dollar. Given Cinram's revised
business outlook and the continued volatility of capital markets, the trustees
determined that a suspension of the Fund's distributions would be fiscally
prudent and would increase our ability to maintain a sufficient cushion with
respect to our debt covenants. At the end of the quarter we had cash of
$46 million and substantial availability under our credit line."
Outlook
In order to help investors understand some of the circumstances
surrounding this change in the Fund's distribution policy, Cinram is providing
the following outlook. For 2007, Cinram expects to record consolidated revenue
in the range of $1,900.0 million to $1,950.0 million, and EBITA in the range
of $275.0 to $285.0 million. Capital expenditures for 2007 are expected to be
approximately $100 million, in line with planned capacity additions for
standard DVD, high-definition disc and related peripheral equipment, as well
as major facility expansions in its Huntsville, Alabama, location.
For 2008, Cinram expects its DVD pricing and CD and DVD volumes to
decline in line with industry trends. However, the contribution of Ditan and
new handset distribution initiatives should result in flat revenue and
partially offset a decline in EBITA margins. For 2008, Cinram expects to have
capital expenditures of approximately $80 million which includes the following
major items: $30 million in maintenance capital expenditures, $30 million in
wireless logistics, $10 million in high-definition discs, and $4 million in
printing.
"We have embarked on an aggressive strategic plan that is already
demonstrating significant success and is expected to make a positive
contribution to our bottom line going forward. In April, we acquired Ditan,
which has enabled us to successfully benefit from cross-selling opportunities
in the games market and to augment our core business. Ditan is now well
integrated into our operations, profitable and tracking according to our
expectations. Further, our recent Motorola North America and Europe
distribution contract wins underscore the potential for a new, complementary
growth platform that leverages existing core competencies and infrastructure
to diversify risk and accelerate growth. We continue to pursue additional
opportunities in value-added logistics for the telecommunications industry
with attractive growth prospects," added Rubenstein.
Q3 2007 performance
Third quarter revenue increased to $485.1 million from $477.2 million in
2006 principally due to increased distribution revenue, which was offset by
lower DVD, CD and printing sales. During the third quarter, Cinram's DVD
manufacturing volume was up three per cent to 298.6 million, while CD volume
fell 14 per cent to 129.1 million.
EBITA, excluding unusual items, decreased to $66.7 million from
$90.1 million in the third quarter of 2006; however, EBITA for the third
quarter of 2006 benefited from a $10 million credit to revenue related to the
reversal of volume rebates. As a percentage of consolidated sales, EBITA
margins decreased to 14 per cent from 19 per cent in 2006. Excluding this
adjustment, third quarter EBITA margins decreased to 14 per cent from 17 per
cent in 2006.
Net earnings for the third quarter increased to $34.9 million from
$15.4 million in 2006. As a result of reduced projections of income and the
tax deductions available under Cinram's existing corporate structure, Cinram
recorded a tax recovery provision of $26.8 in the third quarter of 2007
relating to taxes paid in prior years. Cash flow from operations increased to
$36.6 million from $31.6 million in the third quarter of 2006, and Cinram
generated distributable cash of $43.9 million in the third quarter, resulting
in a payout ratio of 103 per cent. Cinram's distributable cash calculation
excludes changes in non-cash working capital from the distributable cash
amount due to the significant impact of the seasonality of the business.
Year-to-date performance
For the nine months ended September 30, 2007, Cinram recorded revenue of
$1,304.9 million down from $1,323.9 million in 2006, on lower CD, DVD and
printing sales which were partially offset by higher distribution revenue from
Ditan and from organic growth. On a year-to-date basis, Cinram's CD volumes
decreased 17 per cent to 332.8 million units, while DVD volumes were up three
per cent to 813.5 million from 2006.
EBITA excluding unusual items for the nine months ended September 30,
2007, decreased to $171.0 million from $226.5 million in 2006. In addition to
the reversal of volume rebates discussed above, lower prices for DVDs in
addition to disappointing margins in the printing and merchandising segments
all had a negative impact on EBITA in 2007. Cinram recorded net earnings of
$15.5 million in the nine months ended September 30, 2007, compared with a net
loss of $43.9 million in 2006, and cash flow from operations increased to
$179.4 million from $158.2 million in 2006. Year to date, Cinram generated
distributable cash of $81.8 million in 2007, resulting in a payout ratio of
159 per cent.
Product revenue
Third quarter DVD revenue was down five per cent to $226.3 million from
$237.4 million in 2006 as higher volumes were offset by lower prices. Year to
date, DVD revenue decreased to $636.1 million as the three per cent increase
in volume was more than offset by lower prices. Cinram recorded
high-definition disc revenue of $5.2 million and $11.3 million in the quarter
and nine months ended September 30, 2007, up from $1.6 million and $2.8
million in the corresponding 2006 periods, respectively. The adoption of
high-definition discs in 2007 continues to be hampered by the presence of two
competing formats, a situation that industry pundits expect to persist into
and beyond the 2008 holiday selling season. This in turn has lowered Cinram's
expectations for high-definition disc revenue for the remainder of 2007 and
for 2008.
Product Revenue
-------------------------------------------------------------------------
Three months ended September 30
(in thousands of US$) 2007 2006
-------------------------------------------------------------------------
DVD $226,254 47% $237,421 50%
High-definition $5,234 1% $1,646 0%
CD $62,250 13% $71,823 15%
Printing $56,827 12% $63,349 13%
Distribution $95,533 19% $66,083 14%
Merchandising $34,627 7% $31,762 7%
Other(*) $4,334 1% $5,068 1%
-------------------------------------------------------------------------
$485,059 100% $477,152 100%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Nine months ended September 30
(in thousands of US$) 2007 2006
-------------------------------------------------------------------------
DVD $636,134 49% $650,087 49%
High-definition $11,337 1% $2,798 0%
CD $158,999 12% $198,369 15%
Printing $140,682 11% $145,486 11%
Distribution $250,099 19% $205,575 16%
Merchandising $94,562 7% $97,106 7%
Other(*) $13,052 1% $24,504 2%
-------------------------------------------------------------------------
$1,304,865 100% $1,323,925 100%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(*)includes audio cassettes and VHS
CD revenue was down 13 per cent in the third quarter to $62.3 million
from $71.8 million in 2006 on a 14 per cent decline in unit volume. CD revenue
fell 20 per cent on a year-to-date basis to $159.0 million from $198.4 million
in 2006 on a 17 per cent decline in unit volume, lower prices and the closure
of Cinram's CD manufacturing operations in France in the first half of 2006.
Printing revenue was down 10 per cent in the third quarter and down three per
cent on a year-to-date basis to $56.8 million and $140.7 million,
respectively. In 2007, Cinram's printing business has been negatively impacted
by the loss of CD-related business, a change in its revenue mix as well as
increasing competitive pressures.
Third quarter distribution revenue was up 45 per cent to $95.5 million
from $66.1 million in 2006 as a result of the Ditan acquisition and organic
growth in the DVD distribution business. For the nine months ended
September 30, 2007, distribution revenue increased 22 per cent to
$250.1 million from $205.6 million in 2006.
Giant Merchandising's revenue was up nine per cent in the third quarter
to $34.6 million from $31.8 million, but fell three per cent in the on a
year-to-date basis to $94.6 million from $97.1 million in 2006.
Geographic revenue
Cinram recorded North American revenue of $358.0 million in the third
quarter compared with $360.4 million in 2006 principally as a result of lower
DVD, CD and printing sales which were offset by a significant increase in
distribution revenue from the acquisition of Ditan. On a year-to-date basis,
revenue from North America was down two per cent to $964.2 million from
$980.9 million in 2006. Revenue from North America accounted for 74 per cent
of both third quarter and year-to-date 2007 consolidated revenue compared with
76 and 74 per cent in 2006, respectively.
European revenue was up nine per cent in the third quarter of 2007 to
$127.1 million from $116.7 million in 2006, mainly from stronger DVD sales. In
the nine months ended September 30, 2007, European revenue was down one per
cent to $340.7 million from $343.0 million in 2006 mainly on lower CD sales
which were offset by organic growth in distribution revenue. European revenue
represented 26 per cent of both third quarter and year-to-date 2007
consolidated revenue compared with 24 and 26 per cent in 2006, respectively.
Other financial highlights
Third quarter gross profit decreased to $77.9 million from $101.9 million
due to lower pricing, the $10 million credit to revenue related to the
reversal of volume rebates in the comparable 2006 period, lower DVD prices,
and lower operating margins in the printing business. On a year-to-date basis,
Cinram generated gross profit of $201.2 million compared with $241.3 million
in 2006. Gross profit margins (as a percentage of consolidated revenue)
decreased to 16 and 15 per cent for the third quarter and nine months ended
September 30, 2007, from 21 and 18 per cent in 2006, respectively. Selling,
general and administrative (SG&amp;A) costs fell to $43.1 million from
$48.1 million in the third quarter of 2006 on reduced compensation expense and
lower advisory fees. Year to date, Cinram recorded SG&amp;A expenses of
$130.0 million compared with $124.8 million in 2006.
Balance sheet and liquidity
Cinram's cash and cash equivalent position decreased to $46.2 million at
quarter end from $152.7 million at December 31, 2006, as it used $47.4 million
in cash to finance the acquisition of Ditan Corporation and $10.2 million for
the acquisition of Vision Worldwide Management. Cinram also borrowed
$18.1 million under its revolving credit facility to finance working capital
requirements and the repurchase of units during the third quarter of 2007.
With debt of $684.7 million, excluding unamortized transaction costs and
capital lease obligations, Cinram had a net debt position (long-term debt and
revolver loan, excluding unamortized transaction costs, less cash and cash
equivalents) of $638.5 million at September 30, 2007, compared with a net debt
position of $522.8 million at the end of 2006. Working capital decreased to
$123.2 million at September 30, 2007, from $282.5 million at December 31,
2006, as Cinram used funds to finance the acquisition of Ditan, the purchase
of capital equipment, debt repayments and the repurchase of units.
Distributions
The intended suspension of distributions following the distribution for
December 2007 (to be paid in January 2008) may have adverse tax consequences
to certain U.S. investors. The Fund is actively exploring various options to
address these consequences and expects to be able to do so. Distribution of
C$0.1625 (previously C$0.2708) per unit has been declared for November and is
intended to be declared for December 2007 in order to help address the tax
consequences. Investors that could be affected by these tax consequences are
advised to consult with their tax advisors.
The Fund's Trustees declared a cash distribution of C$0.1625 per unit for
the month of November, payable on December 15, 2007, to unitholders of record
at the close of business on November 30, 2007. Cinram International Limited
Partnership also declared a cash distribution of C$0.1625 per Class B limited
partnership unit for the month of November, payable on December 15, 2007, to
unitholders of record at the close of business on November 30, 2007.
Unit repurchase program and unit data
The Fund repurchased 886,900 units during the third quarter and
1,313,200 units as at October 31, 2007, under its normal course issuer bid.
For the three-month period ended September 30, 2007, the basic weighted
average number of units and exchangeable limited partnership units outstanding
was 57.9 million compared with 58.2 million units in the third quarter of
2006. For the nine months ended September 30, 2007, the basic weighted average
number of units and exchangeable limited partnership units outstanding was
58.2 million, compared with 57.7 million units in the prior year.
Reconciliation of EBITA and EBIT to Net Earnings
-------------------------------------------------------------------------
Three months ended Nine months ended
(unaudited, in thousands September 30 September 30
of U.S. dollars) 2007 2006 2007 2006
-------------------------------------------------------------------------
EBITA excluding
unusual items $ 66,736 $ 90,124 $ 171,038 $ 226,501
-------------------------------------------------------------------------
Unusual items(*) 735 3,152 2,682 65,410
-------------------------------------------------------------------------
EBITA(1) $ 66,001 $ 86,972 $ 168,356 $ 161,091
-------------------------------------------------------------------------
Amortization of
capital assets 31,864 36,332 99,848 110,041
Amortization of
intangible assets 17,068 16,107 50,644 48,113
Amortization of
deferred financing
fees - 369 - 2,560
Write off of deferred
financing fees - - - 16,945
-------------------------------------------------------------------------
EBIT(2) $ 17,069 $ 34,164 $ 17,864 $ (16,568)
-------------------------------------------------------------------------
Interest expense 13,437 12,540 39,224 35,996
Foreign exchange gain (3,937) 672 (5,607) (6,751)
Investment income (557) (762) (3,371) (3,030)
Income taxes (26,765) 6,348 (27,895) 1,124
-------------------------------------------------------------------------
Net earnings (loss) $ 34,891 $ 15,366 $ 15,513 $ (43,907)
-------------------------------------------------------------------------
(*) Excluding write-off of deferred financing fees.
(1) EBITA is defined herein as earnings before interest expense, interest
income, income taxes, amortization, foreign exchange gain/loss and a
write-off of deferred financing fees, and is a measure that is
commonly reported and widely used in the industry to assist in
understanding and comparing operating results. EBITA is not a defined
term under generally accepted accounting principles (GAAP).
Accordingly, this measure may not be comparable with other issuers
and should not be considered as a substitute or alternative for net
earnings or cash flow, in each case as determined in accordance with
GAAP. See reconciliation of EBITA to net earnings under GAAP as found
in the table above.
(2) EBIT is defined herein as earnings (loss) before interest expense,
interest income, income taxes and foreign exchange gain/loss, and is
a measure that is commonly reported and widely used in the industry
to assist in understanding and comparing operating results. EBIT is
not a defined term under GAAP. Accordingly, this measure may not be
comparable with other issuers and should not be considered as a
substitute or alternative for net earnings or cash flow, in each case
as determined in accordance with GAAP. See reconciliation of EBIT to
net earnings under GAAP as found in the table above.
Distributable cash
Distributable cash is defined herein as adjusted cash flow from
operations less the sum of capital expenditures and debt repayments and is a
measure that is commonly reported and widely used in the industry to assist in
understanding and comparing operating results. Distributable cash is not a
defined term under GAAP. Accordingly, this measure may not be comparable with
other issuers and should not be considered as a substitute or alternative for
net earnings or cash flow, in each case as determined in accordance with GAAP.
Cinram excludes changes in non-cash working capital from the distributable
cash amount due to the significant impact of the seasonality of the business.
Cinram believes this is the most meaningful presentation to unitholders.
-------------------------------------------------------------------------
Three months Nine months
ended ended
September September
(unaudited, in thousands of U.S. dollars) 30, 2007 30, 2007
-------------------------------------------------------------------------
Cash flow from operations $ 36,554 $ 179,425
Add (deduct) changes in non-cash working capital 47,184 (14,656)
-------------------------
Adjusted cash flow from operations $ 83,738 $ 164,769
Less:
Capital expenditures 38,128 74,046
Debt repayments 1,687 8,929
-------------------------
Distributable cash $ 43,923 $ 81,794
Distributions paid $ 45,381 $ 129,792
Payout ratio 103% 159%
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Conference call and webcast - REVISED DATE AND TIME
Cinram's management team will host a conference call to discuss its
results, the decision to suspend distributions and its strategy today at
5 p.m. (ET). To participate, dial (416) 644-3420 or 1-800-732-0232. The call
will also be webcast live at http://investors.cinram.com/.
About Cinram
Cinram International Inc., an indirect, wholly-owned subsidiary of the
Fund, is the world's largest provider of pre-recorded multimedia products and
related logistics services. With facilities in North America and Europe,
Cinram International Inc. manufactures and distributes pre-recorded DVDs,
audio CDs, and CD-ROMs for motion picture studios, music labels, publishers
and computer software companies around the world. Cinram now also provides
distribution and logistics services to the telecommunications industry in
North America and Europe through its wireless subsidiaries. The Fund's units
are listed on the Toronto Stock Exchange under the symbol CRW.UN and are
included in the S&amp;P/TSX Composite Index. For more information, visit our
website at www.cinram.com.
Certain statements included in this release contain words such as
"could", "expects", 'expectations", "may", "anticipates", "believes",
"intends", "estimates" and "plans" (and similar expressions) and constitute
"forward-looking statements" within the meaning of applicable securities law.
These statements are based on Cinram's current expectations, estimates,
forecasts and projections about the operating environment, economies and
markets in which Cinram operates. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which are difficult
to predict and may cause the actual results, performance or achievements of
the Fund, outcomes, or results of the multimedia duplication/replication
industry, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions, which will, among other things, impact the demand for the Fund's
products and services; multimedia duplication/replication industry conditions
and capacity; the ability of the Fund to implement its business strategy,
including having the cash resources necessary to do so; a shortage of product
due to labour disruptions, the Fund's ability to retain major customers; the
Fund's ability to invest successfully in new technologies and other factors
which are described in the Fund's filings with Canadian securities
commissions. Cinram has made various assumptions in the preparation of its
financial outlook in this press release, including but not limited to: current
2007 contractual prices and normalized price adjustments for 2008, flat DVD
volumes in 2007 and 1-2% DVD volume declines in 2008, capital expenditures
required to meet contractual obligations and expected DVD and high-definition
disc volumes and for printing, capital expenditures required for the new
Motorola agreements, moderate growth in both high-definition disc formats, the
completion of certain rationalization initiatives, and the inability to
reorganize the Fund's structure for purposes of addressing tax consequences to
certain U.S. investors. These assumptions, although considered reasonable by
Cinram at the date of this press release, may prove to be inaccurate and
consequently Cinram's actual results could differ materially from its
expectations as set out in this press release. Unless otherwise required by
applicable securities laws, Cinram disclaims any intention or obligation to
update or revise any forward-looking statements.
INTERIM CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
-------------------------------------------------------------------------
September 30 December 31
2007 2006
(unaudited)
-------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 46,201 $ 152,681
Accounts receivable 432,205 535,377
Inventories 69,966 50,974
Income taxes recoverable 45,435 -
Prepaid expenses 25,632 22,796
Future income taxes 21,444 21,494
-------------------------------------------------------------------------
640,883 783,322
Property, plant and equipment 534,544 509,727
Goodwill 346,221 329,949
Intangible assets 167,388 182,582
Deferred financing fees - 5,147
Other assets 13,934 2,548
Future income taxes 17,818 17,346
-------------------------------------------------------------------------
$1,720,788 $1,830,621
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND UNITHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 18,060 -
Accounts payable 205,197 $ 152,793
Accrued liabilities 271,582 308,471
Distributions payable 15,601 13,620
Income taxes payable - 14,485
Current portion of long-term debt 4,841 10,617
Current portion of obligations under
capital leases 2,430 812
-------------------------------------------------------------------------
517,711 500,798
Long-term debt 654,948 664,875
Obligations under capital leases 6,698 3,412
Other long-term liabilities 30,907 31,025
Derivative instruments 12,535 -
Future income taxes 59,743 62,428
Unitholders' equity:
Fund units 179,681 181,880
Exchangeable limited partnership units 3,233 3,273
Contributed surplus - 4,967
Retained earnings 132,248 260,030
Accumulated other comprehensive income 123,084 117,933
-------------------------------------------------------------------------
438,246 568,083
-------------------------------------------------------------------------
$1,720,788 $1,830,621
-------------------------------------------------------------------------
-------------------------------------------------------------------------
INTERIM CONSOLIDATED STATEMENTS OF EARNINGS
AND RETAINED EARNINGS
(unaudited, in thousands of U.S. dollars, except per
share/unit/exchangeable LP unit amounts)
-------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
2007 2006 2007 2006
-------------------------------------------------------------------------
Revenue $ 485,059 $ 477,152 $1,304,865 $1,323,925
Cost of goods sold 407,114 375,222 1,103,632 1,082,656
-------------------------------------------------------------------------
Gross profit 77,945 101,930 201,233 241,269
Selling, general and
administrative expenses 43,073 48,138 130,043 124,809
Amortization of
intangible assets 17,068 16,107 50,644 48,113
Amortization of
deferred financing fees - 369 - 2,560
Unusual items 735 3,152 2,682 82,355
-------------------------------------------------------------------------
Earnings (loss) before
the undernoted 17,069 34,164 17,864 (16,568)
Interest on long-term
debt 12,843 12,376 38,029 35,648
Other interest 594 164 1,195 348
Foreign exchange
(gain) loss (3,937) 672 (5,607) (6,751)
Investment income (557) (762) (3,371) (3,030)
-------------------------------------------------------------------------
Earnings (loss) before
income taxes 8,126 21,714 (12,382) (42,783)
Income tax (recovery)
expense (26,765) 6,348 (27,895) 1,124
-------------------------------------------------------------------------
Net earnings (loss) 34,891 15,366 15,513 (43,907)
Retained earnings,
beginning of period
as previously reported 156,087 231,797 260,030 317,121
Change in accounting
policy related to
financial instruments - - (154) -
-------------------------------------------------------------------------
Retained earnings,
beginning of period
as restated 156,087 231,797 259,876 317,121
Repurchase of units (13,349) - (13,349) -
Distributions declared (45,381) (41,143) (129,792) (65,707)
Dividends declared - - - (1,487)
-------------------------------------------------------------------------
Retained earnings,
end of period $ 132,248 $ 206,020 $ 132,248 $ 206,020
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings (loss) per
unit or share:
Basic $ 0.60 $ 0.26 $ 0.27 $ (0.76)
Diluted $ 0.60 $ 0.26 $ 0.27 $ (0.76)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average
number of units and
exchangeable LP units
outstanding, (common
shares up to May 5,
2006) (in thousands):
Basic 57,946 58,177 58,227 57,707
Diluted 57,968 58,259 58,253 57,707
-------------------------------------------------------------------------
-------------------------------------------------------------------------
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands of U.S. dollars)
-------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
2007 2006 2007 2006
-------------------------------------------------------------------------
Net earnings (loss)
for the period $ 34,891 $ 15,366 $ 15,513 $ (43,907)
Other comprehensive
income, net of tax:
Unrealized gains
(losses) on
translating
financial statements
of self-sustaining
foreign operations (5,464) 2,227 (22,826) 52,338
Gains on hedges of
net investment in
self-sustaining
foreign operations 16,304 - 40,845 10,372
-------------------------------------------------------------------------
Unrealized foreign
exchange translation
gain (loss), net of
hedging activities 10,840 2,227 18,019 62,710
Net unrealized loss
on derivatives
designated as cash
flow hedges (9,310) - (3,335) -
-------------------------------------------------------------------------
Other comprehensive
income 1,530 2,227 14,684 62,710
-------------------------------------------------------------------------
Comprehensive income $ 36,421 $ 17,593 $ 30,197 $ 18,803
-------------------------------------------------------------------------
-------------------------------------------------------------------------
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, In thousands of U.S. dollars)
-------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
2007 2006 2007 2006
-------------------------------------------------------------------------
Cash provided by
(used in):
Operating Activities:
Net earnings (loss) $ 34,891 $ 15,366 $ 15,513 $ (43,907)
Items not involving
cash:
Amortization 48,932 52,808 150,492 160,714
Write off of
deferred
financing fees - - - 16,945
Future income taxes (1,253) (3,339) (3,107) (14,573)
Release of
cumulative
translation
adjustment 646 656 646 44,900
Hedge
ineffectiveness
of US dollar
denominated debt - 2,349 - 2,687
Non-cash interest
expense 444 - 1,185 -
Gain on settlement
of hedging
arrangements - - - (5,020)
Other 78 - 40 (276)
Change in non-cash
operating working
capital (47,184) (36,267) 14,656 (3,231)
-------------------------------------------------------------------------
36,554 31,573 179,425 158,239
Financing Activities:
Increase in
long-term debt - - - 675,000
Transaction costs - - (2,414) (5,993)
Repayment of
long-term debt and
bank indebtedness (1,687) (3,556) (13,374) (732,199)
Increase in bank
indebtedness 18,060 - 22,505 -
Proceeds on
settlement of
hedging arrangements - - - 5,020
Decrease in
obligations under
capital leases (32) (197) (1,001) (569)
Issuance of units/
common shares - 2,100 992 11,012
Repurchase of units (18,712) - (21,760) -
Distributions paid (45,603) (40,272) (130,026) (51,442)
Dividends paid - - - (1,487)
-------------------------------------------------------------------------
(47,974) (41,925) (145,078) (100,658)
Investing Activities:
Purchase of property,
plant and equipment (38,128) (17,865) (74,046) (44,052)
Acquisition, net
of cash (10,074) - (57,546) -
Proceeds on
disposition of
property, plant and
equipment 143 - 215 201
(Increase) decrease
in other assets 3,185 2,078 (11,386) 4,425
(Decrease) increase
in other long-term
liabilities 4 (3,912) (118) (1,276)
-------------------------------------------------------------------------
(44,870) (19,699) (142,881) (40,702)
Foreign exchange loss
(gain) on cash held in
foreign currencies 162 (127) 2,054 2,088
-------------------------------------------------------------------------
(Decrease) increase in
cash and cash
equivalents (56,128) (30,178) (106,480) 18,967
Cash and cash
equivalents, beginning
of period 102,329 139,066 152,681 89,921
-------------------------------------------------------------------------
Cash and cash
equivalents, end of
period $ 46,201 $ 108,888 $ 46,201 $ 108,888
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental cash flow
information:
Interest paid $ 14,213 $ 9,654 $ 39,135 $ 34,183
Income taxes paid 8,925 12,638 33,041 56,843
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash and cash equivalents are defined as cash and short-term deposits,
which have an original maturity of less than 90 days.